Question

Assuming a project having the following cash flows: Year 0 1 2 3 4 Cash flow...

Assuming a project having the following cash flows:

Year

0

1

2

3

4

Cash flow

-6000

500

-500

5000

3000
  1. What is the NPV of this project if the discount rate is 5%?

Report the answer with 2 numbers after decimal place

  1. What is the IRR of this project?

Report the answer in percentage term with 2 numbers after decimal place such as 12.43%.

  1. What discount rate will make NPV of this project equals to -494.258

Report the answer in percentage term with 2 numbers after decimal place

PLEASE SHOW WORK USING EXCEL

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Homework Answers

Answer #1

Using excel formula to calculate NPV and IRR

A B C D E
Year 0 1 2 3 4
1 Cash flow -6000 500 -500 5000 3000
NPV 809.97 Using Excel formula=NPV(5%,B1:E1)+A1
IRR 9.13% Using Excel formula=IRR(A1:E1)

c. Discount Rate using excel formula

A B C D E
Year 0 1 2 3 4
1 Cash flow -6000 500 -500 5000 3000
2 NPV -494.258
3 Cash flow Difference -5505.742 500 -500 5000 3000
Discount Rate 12.05% Using Excel formula=IRR(A3:E3)
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